What is Bankruptcy Anyway?

Posted by Wesley Scott on August 1, 2019 at 12:31 PM
Wesley Scott

Minnesota-Bankruptcy-Retirement-PlansIf you ask someone at random to explain bankruptcy, they will probably give you an answer that goes something like, “isn’t it a complicated legal thing that means you have no money and everyone judges you for it?” And the only thing that person would be right about is the “complicated legal thing” part! The gist is that most people, even those that have contemplated bankruptcy, don’t really know what bankruptcy is, just that it has to do with money and it comes with a big, old stigma.

If people really knew what bankruptcy was, it would not -and should not –come with that big, old stigma! At the most basic level, bankruptcy is a legal procedure for financial hardships. Bankruptcy can happen to individuals and it can also happen to businesses and companies. There are four Chapters or “types” of bankruptcies: Chapter 7, Chapter 11, Chapter 12, and Chapter 13.

Chapter 7 is the most common type of personal bankruptcy. It is the liquidation of assets to clear debts. A “fresh start” bankruptcy and what people most commonly associate with the idea of bankruptcy.

Chapter 11 is for businesses. It is a reorganization to keep the business up and running while paying back creditors over time. A Chapter 12 is debt relief for farmers.

Chapter 13 is a 3-5 year government debt consolidation plan. This sounds more complicated than it really is.  This is a plan where debtors make payments back to creditors over a set period of time. Any debts unpaid at the end of this period are forgiven and wiped away tax-free.

Consulting with an experienced attorney can help you decide which, if any, Chapter of bankruptcy is an option for you! All chapters of bankruptcy are meant to offer relief to those suffering from overwhelming debt and should be seen as opportunities to start over and to get your life back!

Conclusion

Request a consultation at www.kainscott.com today to see if a personal bankruptcy is the best way to relieve you of your overwhelming debt.